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The true cost of long term care – what you should know

Article

The true cost of long term care – what you should know

30 Sep 2022

4 minute read

The government presented their “Build Back Better” plans on reforming the cost of care. Great news, the cost of care will be capped at £86,000 for England due to come in to force in October 2023.

The true cost of long term care – what you should know - news article image

Roll the clock back to 7th September 2021. 

The government presented their “Build Back Better” plans on reforming the cost of care. Great news, the cost of care will be capped at £86,000 for England due to come in to force in October 2023. 

Or will it? 

Since the “Build Back Better” campaign was presented we have seen many memorandums issued by the Department of Health and Social Care putting some meat on the bones which has since led to subsequent debates as to whether there really is a cap of £86,000 for care. Depending on how cynical one might be, it appears that the ‘cap’ is not all that it could be but at least there was an appetite to address the issue. 

The cap also needs to be funded from somewhere. In anticipation of this, amongst other things, there was an increase to NI contributions aka ‘Health and Social Care Levy’ introduced of which part will be earmarked for Social Care. 

Roll on 12 months however and with a change of Prime Minister from Boris Johnson to Liz Truss things could be about to change again. So far very little has been said about whether the reforms will come to fruition although Liz Truss did though actually vote for the Social Care Levy which will make a significant contribution to funding the cap through an increase to NI payments. 

Following the budget that wasn’t a budget on Friday 23rd September 2023 it was announced that the NI levy will be scrapped. I am unsure now if and how this may impact the social care reforms proposed and time is running out. 

There are currently six ‘trail blazing’ authorities through out England where the reforms are due to come in to force in January 2023. These trail blazers have been tasked to help shape the implementation nationally through testing important aspects of the reform and improve understanding of how it works. 

The six trail blazing authorities include Oxfordshire in addition to Newham, North Yorkshire, Wolverhampton, Blackpool and Cheshire East. 

So how will the cap on care costs be affected under the new proposals should they go ahead as planned? 

Well for starters the cost of care is still likely to significantly exceed the £86,000 headline cap due to the way the care fees cap is going to be calculated. 

The current rules mean that only those with assets under £23,250 (including your property if you own one) will qualify for support from your local authority. Proposals under the new reforms will mean that figure increases to assets under £100,000. 

But importantly what does the £86,000 cap refer to. In this context ‘Care’ is defined as the nursing and assistance costs required to help with ones ‘Activities of Daily Living’ which are typically things like washing, dressing, feeding themselves. 

The cap does not include the ongoing costs in a care home for things such as the room, board and utilities etc. The costs for these components often exceed the actual cost of providing the care itself. There are no proposals at this time to cap these costs hence the total cost of providing care either in the home or a care home is likely to significantly exceed the £86,000 proposed cap for anyone needing care services for an average period of time of three-four years. 

The liability and emotional anxiety that these uncapped and frightening costs can create mean that receiving expert financial advice is vital to navigate the system and options specific to you or your family and loved ones. It is important to be aware of other support available too as there are several other benefits that one may be entitled to which could go some way to supplementing the total cost of providing care to someone. 

If you have ever helped anyone or been involved with finding suitable care for someone you will be well aware of the complexities and rising costs of doing so. The ongoing costs for providing care can be significant and the decision is unlikely to be made by just one individual. It is often a decision made with other family members and the question of ‘where do we start’ is one I hear often. 

At Shaw Gibbs we have a specialist available who will be able to help you understand and navigate the care system, the benefits available and the potential true costs of care. In addition to the tax planning expertise within Shaw Gibbs, seeking expert advice could prove great value for money along with providing you with a greater sense of security and peace of mind for you and your loved ones. 

For an initial informal conversation please get in touch with Nick Hutchings FPFS.

Need expert advice?

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Email
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Need expert advice?

Speak to an expert for advice on
+44-1865 292200 or get in touch online to find out how Shaw Gibbs can help you

Email
info@shawgibbs.com

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